Investment of Insurance Companies And IRDA Regulations MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Investment of Insurance Companies And IRDA Regulations, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Investment of Insurance Companies And IRDA Regulations MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Investment of Insurance Companies And IRDA Regulations mcq questions that explore various aspects of Investment of Insurance Companies And IRDA Regulations problems. Each MCQ is crafted to challenge your understanding of Investment of Insurance Companies And IRDA Regulations principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Investment of Insurance Companies And IRDA Regulations MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

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Investment of Insurance Companies And IRDA Regulations MCQs | Page 7 of 16

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Q61.
What is the significance of the System capturing and considering Instrument Ratings?

a.

To forecast portfolio returns

b.

To facilitate communication between Front Office and Back Office

c.

To identify and manage credit risks

d.

To ensure accuracy in investment operations

Discuss
Answer: (c).To identify and manage credit risks Explanation:To identify, analyze, and manage Credit Risks, the system should capture and consider Instrument Ratings. The system should generate statements of Downgraded Investments and automatically monitor various Regulatory limits on exposure and ratings.
Q62.
Why is the periodic credit review necessary for investee companies?

a.

To forecast portfolio returns

b.

To monitor and control Inter Fund Transfer transactions

c.

To ensure compliance with regulatory requirements

d.

To validate and accept commitments beyond fund availability

Discuss
Answer: (c).To ensure compliance with regulatory requirements Explanation:The investment department is required to make periodic credit reviews for investee companies in the portfolio and keep track of the classification of Approved and Other investments to ensure compliance with regulatory requirements.
Q63.
What role does the System play in compliance with regulatory requirements?

a.

To facilitate communication between Front Office and Back Office

b.

To forecast portfolio returns

c.

To provide and specify regulatory limits

d.

To monitor changes in instrument ratings

Discuss
Answer: (c).To provide and specify regulatory limits Explanation:The Investment Operation System should have the ability to provide and specify regulatory limits to ensure compliance with all regulatory requirements.
Q64.
What is the purpose of the facility to upload transactions like Stock Splits, Dividend Receipts, etc., in the System?

a.

To monitor and control Inter Fund Transfer transactions

b.

To ensure compliance with regulatory requirements

c.

To compute NAV and portfolio valuation

d.

To identify and manage credit risks

Discuss
Answer: (c).To compute NAV and portfolio valuation Explanation:The System is required to have the facility to upload certain important transactions like Stock Splits, Dividend Receipts, Right Issue, Buy Back, Bonus Issue, etc., for computation of NAV and portfolio valuation.
Q65.
What is the significance of maintaining NAV history in the system?

a.

To ensure accuracy in investment operations

b.

To facilitate communication between Front Office and Back Office

c.

To forecast portfolio returns

d.

To compare NAV with the service provider's computation

Discuss
Answer: (d).To compare NAV with the service provider's computation Explanation:The Investment Accounting and Monitoring system must maintain NAV history (Fund-wise) from the Start Date to the current Date and should have the capacity to compare it with the NAV computed by the service provider, if outsourced.
Q66.
How often should major expenses like management fees be accrued for computation of NAV?

a.

Daily basis

b.

Weekly basis

c.

Monthly basis

d.

Annually basis

Discuss
Answer: (a).Daily basis Explanation:For computation of NAV on a daily basis, major expenses like management fees and other periodic charges should be accrued on a day-to-day basis.
Q67.
What is the regulatory requirement for insurers with Asset under Management (AUM) not exceeding Rs. 1000 crores regarding internal audit of investments?

a.

Conduct a quarterly internal audit

b.

Appoint a Chartered Accountant firm for concurrent audit

c.

Conduct an annual internal audit

d.

No internal audit required

Discuss
Answer: (a).Conduct a quarterly internal audit Explanation:Insurers having AUM not more than Rs. 1000 crores are required to conduct a Quarterly Internal Audit to cover both transactions and related systems.
Q68.
What is the role of the Audit Committee in the internal audit process?

a.

To conduct the internal audit

b.

To implement audit recommendations

c.

To prepare the audit report

d.

To appoint the auditor

Discuss
Answer: (b).To implement audit recommendations Explanation:The Audit Committee will examine the investment audit report, and the insurer shall implement all its recommendations.
Q69.
How is investment income typically utilized in insurance companies?

a.

Funding marketing initiatives

b.

Compensating underwriting losses

c.

Covering administrative expenses

d.

Enhancing customer service

Discuss
Answer: (b).Compensating underwriting losses Explanation:Investment income in insurance companies is typically utilized to compensate for underwriting losses incurred in the competitive market.
Q70.
How are financial assets defined?

a.

Tangible assets like commercial property

b.

Claims in paper or electronic form on the issuer

c.

Government securities only

d.

Investment in public provident funds

Discuss
Answer: (b).Claims in paper or electronic form on the issuer Explanation:Financial assets are defined as claims in paper or electronic form on the issuer, such as corporate bodies or the government.
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